Announced Action for April 1, 2003

The Staff of the Bureau of Economics and the General Counsel's Office of the Federal Trade Commission have filed comments on the proposed decision of the Public Utilities Commission of the State of California (CPUC) that would establish charges a customer must pay if the customer decides to reduce its demand for electricity by generating its own electric power. The proposed decision establishes charges that customers would pay to cover the costs that the California Department of Water Resources' (CDWR) would incur by procuring electric power on behalf of retail customers.

Customers who chose to reduce their demand of electricity after a certain cap is met are charged a fee. The staff comment addresses two policy issues related to the recovery of these charges that other states may face as they consider similar cost recovery issues, such as recovering stranded costs of generation facilities that become uneconomical once customers can choose lower-cost independent suppliers. First, the staff suggests that the CPUC may wish to assure itself that the exit fees charged to these customers do not discriminate against the customers by making the fees disproportionately large. Second, the CPUC may wish to allow all customers to pay off their obligations in one lump sum, instead of permitting only departing customers to do so. By allowing all customers to pay in one lump sum, certain economic distortions that are not in the public interest will be avoided; paying in installments would add a surcharge to each payment, thereby increasing the customer's costs and causing the customer to reduce his or her purchases.

The staff comments are now available on the FTC's Web site as a link to this release. The Commission vote authorizing their issuance was 5-0. (FTC. File No. V030006; staff contact is Michael S. Wroblewski, Office of the General Counsel, 202-326-2155.)

Copies of the documents mentioned in this release are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Call toll-free: 1-877-FTC-HELP.